Ukraine Escapes National Default... Fitch Upgrades Credit Rating by Three Levels

Upgraded Three Notches from RD to CCC

Volodymyr Zelensky, President of Ukraine.

Ukraine, which has been engaged in a prolonged war with Russia, has averted national default through debt restructuring and financial support from Europe.

On December 22, international credit rating agency Fitch upgraded Ukraine's long-term foreign currency issuer default rating from RD (Restricted Default) to CCC (Substantial Credit Risk). According to Fitch's rating scale, RD indicates 'default,' while CCC, three notches higher, is considered 'non-investment grade and speculative.'

This reflects significant normalization of Ukraine's debt relations with foreign private creditors. After Ukraine entered default when its debt repayment moratorium ended in 2024, the country agreed to a restructuring of approximately $20 billion in sovereign bonds, followed by an agreement last week to restructure $2.6 billion in GDP warrants. As a result, 94% of Ukraine's commercial external debt has now been restructured.

Additionally, the European Union has agreed to provide Ukraine with a total of 90 billion euros in interest-free loans over the next two years starting in 2025. This support is expected to help meet Ukraine's military and fiscal needs and reduce its short-term debt repayment burden.

Meanwhile, on the same day, the Ukrainian parliament decided to form a task force to review the possibility of holding a presidential election under wartime martial law. This move appears to be in response to pressure from U.S. President Donald Trump, who has accused Ukraine of using the war with Russia as an excuse to avoid elections.

President Volodymyr Zelensky's term officially ended in May of last year, but he has continued in office as the presidential election has been indefinitely suspended due to the imposition of martial law during the more than three-year-long war with Russia.